E-Malt.com News article: 1420

Belgian brewing giant Interbrew suffered a setback on Friday to plans for streamlining its U.S. operations, when a court refused to overturn a ruling that prevented it from merging two distribution units.

The world's third-largest brewer, known for its Stella Artois and Rolling Rock brands, lost a legal dispute with Mexico's Femsa, its partner in one of the two units, which objected to the merger.

Interbrew said it would not appeal the ruling, adding the decision would not affect its financial results.

"The company, anticipating this possible outcome, has already restructured the channels of distribution in the USA," it said.

Interbrew spokesman Corneel Maes said his company was in talks with Femsa, but declined to say whether it was still trying to convince its partner to allow the merger to proceed.

Dresdner Kleinwort Wassertein analyst Ralf Knabe said the company must still find some way to resolve the inefficiencies of operating two U.S. channels.
"I want to know what is going to happen in the long term," he said.
One of the units, Labatt USA, is owned 30 percent by Femsa, with Interbrew holding the rest.

Separately, Interbrew also runs the U.S. operations of Germany's Beck's beer, acquired in August 2001.

The company's attempt to merge the two units was blocked by a U.S. court ruling in May 2002, following Femsa's objections.

The Mexican company complained it had not been properly consulted about the merger.

Interbrew appealed the decision, but on Thursday the U.S. Court of Appeals for the Second District sided with the lower court, ruling that Femsa's 30 percent stake in Labatt USA gave it veto power over a merger.

The ruling had little impact on Interbrew's stock, which has ridden to three-month highs on a heat wave in Europe that investors hope will boost beer sales.
Interbrew ended up 2.28 percent at 20.20 euros in Brussels.

Femsa's shares were up 1.6 percent on Friday at 41.1 pesos.

Source: Reuters.


13 August, 2003